L&T rules out Mindtree merger with its IT arm, says will run independently

Engineering major L&T which mounted a hostile takeover of software firm Mindtree with Rs 10,733-crore bid on Monday ruled out merging it with its IT arm for the time being. L&T on Monday announced a hostile takeover bid involving a three-pronged acquisition of Mindtree, wherein it will pay Rs 980 a share for 20.3 per cent stake of V G Siddharth, buying 15 per cent from the public and mounting an open offer at Rs 980 a share later.

Thus, it plans to acquire 67 per cent for a consideration of Rs 10,733 crore. "We have not thought about integrating Mindtree with us (L&T Infotech). For the time being, it will be run as an independent entity," L&T Managing Director and chief executive S N Subramanyan told reporters here on Tuesday.

Describing the deal as the meeting of two like-minded people, he said V G Siddharth whose 20.3 per cent stake the company has bought out at Rs 980 a share, had approached them three months back for buying him out. "It was a meeting of minds between us and Siddharth," Subramanyan said, adding the Cafe Coffee Day owner wanted to house his shareholding with a group where he saw the same governance values and ethics.

"The senior management at Mindtree are good friends with us and are people of repute and we see a lot of positivity in going ahead with the deal," he said. He also reassured employees that L&T is an 80-year-old company with strong governance values.

"Mindtree will be run as an independent company, LT will provide board oversight. We hope better sense and rationality will prevail," Subramanyan said. L&T group CFO R Shanker Raman said there is a relative upside to Mindtree and that's what made them to buy the company and that both the companies (L&T Infotech and Mindtree) are USD 1 billion each and have enough opportunity to grow respectively.